Energy Use in the U.S. Food System

Energy is used throughout the U.S. food supply chain, from the
manufacture and application of agricultural inputs, such as
fertilizers and irrigation, through crop and livestock production,
processing, and packaging; distribution services, such as shipping
and cold storage; the running of refrigeration, preparation, and
disposal equipment in food retailing and foodservice
establishments; and in home kitchens. Dependence on energy
throughout the food chain raises concerns about the impact of high
or volatile energy prices on the price of food, as well as about
domestic food security and the Nation's reliance on imported
energy. Use of energy in the food chain could also have
environmental impacts, such as through carbon dioxide
emissions.

What Is the Issue?

A number of Government and academic studies over the past four
decades have examined foodrelated energy use in the United States.
Taken together, these studies indicate that food-related energy use
has remained a substantial share of the total national energy
budget, that food-related energy use of households has been the
largest among supply chain stages, and that food-related energy
flows may have increased significantly over the past decade. These
results, however, do not explain why energy use has changed over
time and may not provide a valid measure of these changes since the
various studies rely on different data sources and different model
assumptions.

This report compares estimates of energy use in 1997 and 2002 by
using data exclusively from two Federal agencies and employing the
same energy-flow model over each year of analysis. A projection of
food-related energy use in 2007 is also reported. This approach
complies with well-established international "best practices" for
the measurement of energy use throughout a national economy and
facilitates valid comparisons of energy flows over two or more
periods. The report provides policymakers and analysts with
information to assess which stages of the food supply chain and
what industries are the largest energy users, which stages and
industries have experienced the fastest rates of energy-use growth,
what factors have influenced increases in energy use in the food
sector, and what factors are likely to influence changes in the
future.

What Did the Study Find?

During 1997-2002, per capita energy use in the United States
declined 1.8 percent, while per capita food-related energy use in
the United States increased by 16.4 percent. The population of the
United States grew by more than 14 million over the period, pushing
total energy use up by 3.3 percent and effecting an increase in
total food-related energy use of 22.4 percent. As a share of the
national energy budget, food-related energy use grew from 12.2
percent in 1997 to 14.4 percent in 2002.

Several economic factors can influence the use of energy
throughout the U.S. food system, such as labor and energy costs,
the ability to substitute between these inputs as their costs
change, the time availability of households for food-related
activities, and household affluence. Findings suggest that about
half of the growth in food-related energy use between 1997 and 2002
is explained by a shift from human labor toward a greater reliance
on energy services across nearly all food expenditure categories.
High labor costs in the foodservices and food processing
industries, combined with household outsourcing of manual food
preparation and cleanup efforts through increased consumption of
prepared foods and more eating out, appear to be driving this
result. Increases in per capita food expenditures (adjusted for
inflation) and population growth also helped drive up food-related
energy use over this period, with each trend accounting for roughly
a quarter of the total increase.

Energy use and growth varied across all stages of the U.S. food
supply chain (agriculture, processing, packaging, transportation,
wholesale/retail, foodservice, and household). Household operations
accounted for the highest food-related energy use in 1997 and 2002.
Food processing, however, showed the largest growth in energy use
over this period, as both households and foodservice establishments
increasingly outsourced manual food preparation
and cleanup activities to the manufacturing sector, which relied
on energy-using technologies to carry out these processes. Over
this period, the food processing and foodservice industries faced
increasing labor costs, while energy prices in this period were
lower and far less volatile than they have become since 2002. In
agriculture, the largest percentage increases in energy use were
attributed to producers of vegetables and poultry products. The
freight services industry accounted for a small share of the
increase in overall food-related energy use but a substantial share
of the increase attributed to some food commodities-particularly
fresh fruit and poultry products.

A projection of food-related energy use based on 2007 total U.S.
energy consumption and food expenditure data and the benchmark 2002
input-output accounts suggests that food-related energy use as a
share of the national energy budget grew from 14.4 percent in 2002
to an estimated 15.7 percent in 2007. Although energy prices were
high and volatile over the 2002-07 period, households and the
foodservice industry continued to outsource food preparation
through the purchase of prepared foods with high energy-use
requirements.

How Was the Study
Conducted?

Using a framework known as input-output material flow analysis,
this study traced the measured flows of all energy sources used as
fuel in the United States to final markets in three interrelated
steps: (1) measure all known quantities of energy directly used in
each domestic production activity, including household operations,
organized into roughly 400 industry classifications; (2) trace the
flow of energy embodied in each of the energy-using industry
products throughout the production economy and into a complete
accounting of final market sales; and (3) identify
all food-related final markets and assess the food-related energy
embodied in all final market sales. This analysis uses data from
two Federal sources: the Bureau of Economic Analysis Benchmark
Input-Output tables and the Energy Information Administration's
State Energy Data System.